TAIEX may bounce back soon

NO SURPRISES An irrational reaction to the drop in world markets during the Lunar New Year holiday was expected. As Wall Street recuperates, the TAIEX could follow suit

By Joyce Huang / STAFF REPORTER , WITH AFP

Taiwanese share prices could soon rebound slightly after closing 1.57 percent lower yesterday, in line with losses on international bourses last week while the TAIEX was closed for the six-day Lunar New Year holiday, analysts said yesterday.

"If Wall Street continues to climb, the TAIEX could reflect that gain and see an upturn as early as [today] ... with a high of about 7,800 points within a week," Mega Securities Co (兆豐證券) assistant vice president Alex Huang (黃國偉) said.

He said the TAIEX's 1.57 percent decline yesterday still outperformed the US market, which dropped 4 percent in the past 10 trading days.

The TAIEX closed down 120.69 points to close at 7,553.30, after moving in a range of 7,530.37 to 7,619.98. Turnover was NT$113.63 billion (US$3.55 billion).

Decliners led risers 1,353 to 585, while 268 stocks were unchanged.

A total of 85 stocks closed limit-down and 44 were limit-up.

The financial sector was down 1.6 percent and the textile sector down 0.88 percent.

The tourism sector was up 6.41 percent as investors welcomed news of the arrival of 700 Chinese tourists.

The cement sector was up 5.64 percent, the construction sector was up 4.72 percent, the food sector was up 2.37 percent and the plastics and petrochemical sector was up 1.11 percent.

"Some sort of knee-jerk reaction to the losses on Wall Street and other markets following the Lunar New Year holiday is perfectly understandable," said Arch Shih, an analyst at Taiwan International Securities (金鼎證券).

He said the bellwether technology sector was particularly hit by worries that companies relying on the US market for export orders would suffer in the event of a US recession.

Although many non-technology firms defied the negative undertone, their near-term fate was subject to how Chinese markets perform when they resume trade today, he said.

"Many of our old-economy industrials have shown resilience mainly on expectations that Taiwan will ease regulations on cross-strait interchanges," Shih said. "But further fallout from China's snow storm would surely spoil the mood."